Coca-Cola (KO, Financial) managed to offset the impact of sluggish market demand in the third quarter by implementing a significant price increase of over 10%, leading to revenue and profit figures that exceeded Wall Street's expectations.
The company's financial report for the three months ending September 27 revealed a 1% decline in net revenue year-over-year to $11.9 billion, slightly higher than the anticipated $11.6 billion. Organic revenue, excluding acquisitions, divestitures, and currency impacts, grew by 9% during this period. Adjusted earnings per share stood at $0.77, a 7% year-over-year decrease but above the expected $0.74. Net income attributable to shareholders decreased by 8% to $2.85 billion, and the operating profit margin fell by 6.2 percentage points to 21.2% compared to the same period last year.
Looking ahead, Coca-Cola forecasts approximately 10% organic revenue growth for 2024, up from the previous 9%-10% projection. The company maintains its prediction of a 5%-6% growth in comparable earnings per share for the current year.
CEO James Quincey expressed confidence in Coca-Cola's resilience amid changing external conditions, emphasizing the company's focus on managing short-term challenges and pursuing long-term growth opportunities. Following the earnings release, Coca-Cola's pre-market losses narrowed to 0.9%. The stock has gained over 16% this year.
Coca-Cola plans to provide comprehensive 2025 guidance with its fourth-quarter report but has already noted that exchange rates are expected to negatively impact next year's results, with revenues facing a low single-digit impact and earnings per share a mid-single-digit impact.
In the third quarter, Coca-Cola experienced a 1% year-over-year decline in unit case volumes, primarily due to weak demand in international markets. Volumes in Europe, the Middle East, Africa, and the Asia-Pacific region fell by 2%, while the North American market remained stable. Sales in water, sports drinks, coffee, and tea declined, but sodas, juices, dairy, plant-based beverages, and sparkling drinks saw growth.
By category, sparkling water and sodas like Sprite held firm, whereas juices, dairy, and plant-based beverages dropped by 3%, and water, sports, coffee, and tea categories fell by 4%, with bottled water sales down 6%.
Coca-Cola noted that the 10% price increase in the quarter exceeded Wall Street's anticipated 6.51%, with approximately 4% of the hike occurring in high-inflation markets such as Argentina.
